The Blog

January 9, 2014

World Tour

Some intellectual wag once described newspapers as the first draft of history with good and obvious reason. Now I have come to the conclusion that Dreamforce is the first draft of Salesforce.com’s annual plan. It has been obvious for several years but as the company has grown it has invested increasing resources into both the initial event and in the follow on activities in which Chairman and CEO Marc Benioff barnstorms the planet bringing his annual message. Perhaps the more current image should be a rock group publishing an album then going on tour. Whatever.

The 2014 World Tour started this week in New York (as usual) amid an arctic vortex of hyper cold that seemed to have almost no effect on participation. New Yorkers, and we Easterners in general, are a hardy bunch. The lone casualty of the event was the host who was sucking on lozenges in his speech though he was otherwise unaffected.

There was a lot to get through in the daylong event. At the same time the company published its Spring ’14 release notes, a tome of more than 300 pages which I am sure they did not get all the way through in PowerPoint and I will not attempt here.

The big points, I think, are these. The company’s strategy is to foster an attitude of developing apps first for the small screen and then extrapolating out to the larger devices. This idea, while not new, supports the notion of mobility and the move from business conducted at the desktop to doing business anywhere, anytime. Salesforce has the luxury of pursuing this approach because it took care of things like social orientation and marketing earlier so that it is now free to go after this next phase of computing.

To be clear, the company believes the next phase of computing involves the man-machine interface and Benioff’s vision is of a customer experience with software support for the products, services, devices, and people involved in both sides of the relationship. It is a tall order and while there are products and large enterprise customers embracing the outlines, it is still partly aspirational and it will take a few years to bring this brave new vision to Main Street.

To make this possible, though, Salesforce made significant enhancements to its burgeoning platform including increasing its API set by an order of magnitude. There are ten times the number of APIs now than there were a year ago which makes it possible for all of the company’s components and customers’ developed apps to all run like one big, well-oiled machine.

At a finer grained level, the company appears to be trying to bring the business public along to a new business model, one that includes people and their devices but which also requires a different orientation by vendors. Nobody told me this and I am reporting what I see. The old model starts with concepts of selling more, increasing profits, and all of the virtues that CRM has been peddling for a long time. But the reality of the marketplace is different and it is increasingly that direction that the company appears to be steering towards.

Old CRM assumes a limitless marketplace of new opportunities to be captured as fast as possible so that the seller can move onto the next one — call it a linear model. Traditional attributes of CRM that promise faster deals sell well in this environment. However, the marketplace reality is one of limits, the number of potential customers in any market is vast but it is limited and increasingly vendors are reaching the limits of growth in new accounts. They are realizing instead that selling more means selling again as in selling a new version to an existing customer — call that the lifecycle model.

The lifecycle model’s reality is driving the inclusion of things like social media into the CRM suite and it is driving the intense interest in marketing by all vendors. It has also been, I think, a driving force in the sudden interest in customer service as evidenced by the recent acquisitions of Parature by Microsoft and KANA by Verint.

It should be obvious but let me say it, you can’t sell the new gizmo to a customer who is disgruntled nor will that customer be likely to say nice things about you in the market, thus the new emphasis on customers and nurturing and the company buying frenzy.

More subtlety this reality changes the fundamental relationship between vendor and customer, a change most easily seen in terminology. Throughout the presentations in New York, save one, the Salesforce presenters were on message referring to customers as customers and not as consumers. Using consumers references the linear business model steeped in the idea of limitless markets and supply chains working full tilt to deliver a steady stream of things that are lapped up just in time.

But the model and the focus that Salesforce is building products to support goes beyond the linear to the cyclical and it understands that customers — who are increasingly subscribers — let their demand ebb and flow. Vendors therefore must remain alert to the vagaries of customers’ demand by being vigilant and ready to nurture. Indeed the nurture cycle becomes the permanent condition in this model. That’s the real focus of embedding social media, analytics, and mobility.

This is not a done deal by any stretch and the company seemed to straddle its historic commitment to CRM while pointing out the future direction. It can and will only move as fast in the future direction as its customers appear ready to follow but it seems to be doing whatever it can to move the needle. In the one presentation where the speaker used consumer instead of customer, the message sounded slightly off to my ears. It was like the difference, if you speak Southern, of hearing “y’all” used in a plural context where everyone knows that “all y’all” is the proper syntax.

We aren’t at the point where the difference is glaring but I think 2014 might be the tipping point year for eliminating consumer from the discussion in favor of the word customer. All y’all should pay attention to that.